Guinness Nigeria Plc, one of the leading brewery companies in the country, has reported a financial downturn in its latest unaudited report for the nine months ending March 2024.

The company recorded a loss before tax of N60.45 billion, its first loss in five years while in the same period last year, the company reported N9.94 billion in profit.

The loss is attributed to a combination of increased operational expenses and significant foreign exchange (FX) pressures. Operating expenses surged by 9% from N44.43 billion to N48.50 billion.

This rise in costs, coupled with an 89% increase in FX loss to N83 billion, largely driven by a $22.5 million loan from its parent company and the float in exchange rate in 2023, severely impacted the company’s bottom line.

Despite these challenges, Guinness Nigeria’s revenue saw a notable increase of 27%, climbing to N220.30 billion from N172.47 billion the previous year.

This revenue growth was primarily due to increased local sales, indicating a strong market presence despite the financial hurdles.

Analysts at CardinalStone noted that the elevated cost pressures are expected to persist in the coming quarters, driven by rising inflation affecting locally sourced raw materials and foreign exchange volatility impacting imported products.

They anticipate a flattish EBIT margin of 10.1% for the full year 2023/2024, influenced by high energy prices and increased marketing expenses due to intense industry competition.

The challenging economic environment has led to a significant increase in the prices of many commodities.

Nigeria’s headline inflation hit a 28-year high of 33.95% in May, reflecting the declining purchasing power of consumers.

Despite the current financial setback, there is optimism about the future. Analysts expect a recovery in EBIT margin to 10.2% in the 2024/2025 fiscal year, supported by the localization of raw materials, improved export earnings, and reduced foreign currency exposure.

The recent acquisition of a majority stake by Tolaram, coupled with long-term licensing agreements, is anticipated to provide synergistic benefits and strong revenue growth.

Business activity in Nigeria reached its lowest point in seven months this June, according to the latest Purchasing Managers’ Index (PMI) report from Stanbic IBTC Bank.

The headline PMI dropped to 50.1 from 52.1 in May, indicating a near-stagnation in the Nigerian private sector.

The PMI readings above 50.0 signify an improvement in business conditions, while those below indicate deterioration.

The report attributes this slowdown to subdued demand and escalating price pressures, which have led to a deceleration in both output and new orders.

“June data signaled a broad stagnation of the Nigerian private sector as subdued demand and intense price pressures led to slowdowns in the growth of output and new orders. In turn, employment rose only fractionally,” the report stated.

There were clear signs of increasing inflationary pressures, with purchase prices, staff costs, and selling charges all rising more rapidly than in May.

The report highlighted that although new orders continued to rise, the rate of expansion was marginal and the weakest in the current seven-month growth period.

This sluggish demand was largely due to sharp price increases, which made it challenging for customers to commit to new projects.

“The Stanbic IBTC headline PMI dropped to a seven-month low of 50.1 points in June from 52.1 in May due to moderation in domestic demand amid the intensification of price pressures, leading to slowdowns in the growth of output and new orders,” said Muyiwa Oni, head of equity research West Africa at Stanbic IBTC Bank.

The PMI index, derived from a survey of 400 companies across agriculture, manufacturing, services, construction, and retail sectors, is a composite index based on five individual indexes with the following weights: new orders (30 percent), output (25 percent), employment (20 percent), suppliers’ delivery times (15 percent), and stock of items purchased (10 percent), with the delivery times index inverted to move in a comparable direction.

Oni further explained that new orders recorded near-stagnation as new business increased only marginally at the slowest pace in the current seven-month sequence of expansion.

Financial challenges at customers reportedly limited the ability of firms to fully benefit from any improvement in underlying demand.

“In line with the picture for new orders, output rose at a slower pace during June, settling at its weakest level in four months,” Oni added.

This downward trend poses challenges for the Nigerian economy, which has been grappling with various macroeconomic pressures.

The PMI findings come at a time when businesses in Nigeria are navigating through a complex economic landscape marked by inflation and a volatile global market.

Ardova Plc, a leading indigenous energy company, and global lubricants giant Shell International have joined forces to launch the inaugural “Power Conference.”

The event, themed “Powering Nigeria’s Industries – Enhancing Productivity and Competitiveness,” was held in Lagos and drew significant attention from key stakeholders across the energy sector.

The conference stems from a strategic partnership between Ardova Plc and Shell International, highlighting their joint commitment to advancing Nigeria’s energy sector and fostering economic development.

The collaboration aims to create a platform for discourse on innovative energy solutions and collaborative approaches to drive industrialization and sustainable growth in the country.

In his opening remarks, Abdulwasiu Sowami, Group Executive Chairman of Ardova Plc, said its important to address the nation’s energy challenges through collective efforts.

“The Shell Power Conference serves as a nexus for experts and stakeholders to readdress the pressing challenges facing the Nigerian power sector.

“It underscores the critical need for collaborative approaches to drive industrialization for growth and development.

“At Ardova Plc, our vision is to promote power as a national aspiration by meticulously designing and recognizing key opportunities to provide adequate results,” Sowami stated.

Moshood Olajide, Managing Director at Ardova, reiterated the company’s commitment to fostering innovation and sustainability within the energy sector.

“The Shell Power Conference provides an invaluable platform for collaboration and knowledge-sharing, which is essential for driving progress in our industry. We are excited to participate in discussions that will shape the future of energy and look forward to the opportunities that arise from this esteemed gathering,” Olajide said.

The conference also featured discussions on initiatives and projects aimed at transitioning Nigeria towards a sustainable energy future, aligning with global efforts to combat climate change and reduce carbon emissions.

Keynote speakers and panelists explored innovative solutions and technologies that can enhance productivity and competitiveness in Nigeria’s business landscape.

Samir Mahgoub, Regional Sales Manager for Africa and European markets at Shell International, expressed enthusiasm about the partnership with Ardova.

“We are excited to collaborate with Ardova at the Shell Power Conference in our bid to advance sustainable energy solutions across Nigeria and the West African market. This conference is an opportunity to exchange ideas and explore innovations that will drive energy transition,” Mahgoub noted.

One of the highlighted innovations at the conference was the Shell Lubricant Solution, which utilizes proprietary Gas-to-Liquids (GTL) technology to convert natural gas into high-quality base oils for lubricants.

These GTL-based lubricants are designed to offer greater reliability and superior performance, particularly for the power sector’s transmission and distribution operations.

At the conclusion of the event, attendees expressed optimism about the future of Nigeria’s energy sector and commended Ardova and Shell for their proactive efforts in addressing energy challenges.

The “Power Conference” is expected to be an annual event, serving as a catalyst for ongoing dialogue and collaboration among industry stakeholders to drive sustainable growth and development in Nigeria’s energy landscape.